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Subject Topic: Governmental accounting (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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Future CPA
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Posted: 21 Nov 2009 at 21:15 | IP Logged  

There is a small chart on page F8-21 in the Becker book.

It shows the options for Expenditure recognition:

PURCHASE METHOD
When buying item:
Dr. Expenditure
Cr. Vouchers payable

When use of item:
No entry

When on-hand at year end:
Dr. Supplies inventory
Cr. Reserve for supplies

CONSUMPTION METHOD
When buying item:
Dr. Supplies Inventory
Cr. Vouchers payable

When use of item:
Dr. Expenditure
Cr. Supplies inventory

When on-hand at year end:
No entry


Now assume that you have inventory left over at the year end. In the purchase method, you expensed everything that you purchased. But in the consumption method, you expensed as you sold the inventory. So does that mean that you will have higher expenditures in the purchase method?


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My inspiration: "O mankind! We have created you male & female, & have made you nations & tribes that ye may know one another. The noblest of you is the best in conduct."-Quran
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CPA N2009
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Posted: 21 Nov 2009 at 21:45 | IP Logged  

Future - if you are on line - I need to ask you a quick question on AUD - thanks so much - test is Tuesday and I am trying not to panic

 



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Future CPA
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Posted: 22 Nov 2009 at 01:37 | IP Logged  

Hey, sorry I wasn't home. I'm on now, or you can shoot me an email at my Yahoo address.

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B:85
A:90
R:92
F:90
My inspiration: "O mankind! We have created you male & female, & have made you nations & tribes that ye may know one another. The noblest of you is the best in conduct."-Quran
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snehakhabiya
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Posted: 28 Nov 2009 at 16:02 | IP Logged  

Yes, I think we will have more expenditure with the
Purchase method and more CUrrent assets with the
Consumption method.

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AUD: 86
FARE: November 30th
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